"If that order gets reversed there will be very serious consequences
for the industry -- it could kill it," Citron tells Light Reading.

That order, issued November 9, preempted an order by the Minnesota
Public Utilities Commission applying to Vonage VOIP service the
state's own long list of 'telephone company' regulations,
which include rules on everything from E911 services to billing
practices.

The California and Minnesota state utilities commissions have now
filed separate appeals in circuit courts, while New York and Ohio are
reportedly considering following suit.

Representatives from the state commissions claim the FCC's Vonage
ruling leaves many regulatory questions unanswered, and opens the door
for traditional carriers to begin VOIP offerings just to skirt state
regulations.

Citron claims Minnesota PUC's regulations were written for wireline
carriers and do not fit the way VOIP providers conduct business. For
instance, the state's rules on billing practices apply only to
after-the-fact payment, Citron says, while Vonage service is all
pre-paid.

The Minnesota regulations also require phone numbers to be closely
associated with physical addresses (for E911 purposes), while Vonage
service can be used anywhere a broadband connection is
available. "They wanted our users to stay in one place," Citron says.